Accounts For the Year Ended June 30, 2016

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2 In the Name of Almighty Allah The Most Beneficient The Most Merciful Accounts For the Year Ended June 30, 2016

3 Vision To be one of the largest Pakistani textiles supplier, fully equipped to cater to all needs of ever evolving global markets. To explore and create growth opportunities to maximize return to all stakeholders. Mission To take the company to a new height where it is rated as the best in all spheres of business and everyone concerned feels proud of being its integral part.

4 Business Ethics and Practices Our Core business is to produce and supply of Textile Products to local and international our top priority, we follow the under mentioned business practices for the achievement of the desired results of customer satisfaction. HUMAN RESOURCE DEVELOPMENT We believe in individual respect and growth. Our employment and HR policies develop individuals without race, religion, gender or any discrimination factor. We provide equal opportunities to all the employees under a team based working environment. We provide all the possible support to all our employees to enhance their knowledge and vision keeping in view of their own limitations. SOCIAL AND COMMUNITY COMMITMENTS ethical, in supporting all the deserving individuals of the society. We feel it is our responsibility to play our role in the development of the society and do maximum within our own limitations for the community at large. RISK MANAGEMENT Our risk management policies are geared to enhance share holders worth, improve credit worthiness and minimize credit risk while diversifying income, along with suppliers and institutions as we take them as our business partners. TRANSPARENT FINANCIAL POLICIES following all the applicable laws and best accounting practices while preparing t statements for the stakeholders.. We are CORPORATE GOVERNANCE We as a responsible corporate citizen strongly adhere to the Corporate Governance principles and comply with the regulatory obligations enforced by regulatory agencies for improving corporate performance. We believe in up rightness of performance and expect it to be a fundamental responsibility of our employees to act in the best interest of the company without compromising on the rules and regulations enforced by the regulators. MARKETING AND INDUSTRY PRACTICES All our marketing polices are customer focused. We believe in One Window Solution and customer satisfaction. Our marketing policy is only based on these two parameters and to making a close liaison with markets, customers and their needs.

5 Contents Company Information 5 Notice of Annual General Meeting 7 Directors' Report to the Members 9 Financial Highlights 14 Statement of Compliance with Code of Corporate Governance 15 Review Report on Statement of Compliance with Code of Corporate Governance 17 Auditors' Report 18 Balance Sheet Statement of Comprehensive Income 23 Cash Flow Statement 24 Statement of Changes in Equity 25 Notes to the Accounts 26 Pattern of Shareholding 65 Pattern of Shareholding Under Code of Corporate Governance Form of Proxy

6 Company Information Board Of Directors Mr. Mughis A. Sheikh Mr. Fareed M. Sheikh Mr. Muhammad Tariq Mr. Muhammad Atta ullah Khan Mr. Muhammad Ashraf Saif Mr. Abdul Hakeem Khan Qasuria Mr. Muhammad Ikram ul Haq (Chairman) Board Committees Audit Committee Mr. Muhammad Ashraf Saif Mr. Muhammad Atta ullah Khan Mr. Abdul Hakeem Khan Qasuria (Chairman) HR & Remuneration Committee Mr. Muhammad Ashraf Saif Mr. Muhammad Ikram ul Haq Mr. Abdul Hakeem Khan Qasuria Other Management Committees Executive Committee Mr. Fareed M. Sheikh Mr. Muhammad Tariq Mr. Muhammad Atta ullah Khan Technical Committee Mr. Fareed M. Sheikh Mr. Muhammad Tariq Mr. Muhammad Azeem (Chairman) (Chairman) (Chairman) Finance Committee Mr. Fareed M. Sheikh Mr. Atta Mohyuddin Khan Mr. Bilal Ahmad Khan Mr. Hammad Shakeel Social Compliance & Human Resource Mr. Fareed M. Sheikh Mr. Muhammad Atta ullah Khan Mr. Atta Mohyuddin Khan (Chairman) (Chairman) 05

7 Company Information Mr. Atta Mohyuddin Khan Company Secretary Mr. Muhammad Abid Auditors Tariq Abdul Ghani Maqbool & Co. Chartered Accountants Legal Advisor HAIDERMOTABNR Advocates and Corporate Counsel Registered Address M. Ismail Aiwan-e-Science Building 205 Ferozepur Road, Lahore Phone : Fax : corporate@colonytextiles.com Website : Share Registrar Hameed Majeed Associates (Pvt.) Limited HM House, 7 Bank Square Lahore. Phone: (042) , Fax: shares@hmaconsultants.com Bankers Faysal Bank Limited Habib Bank Limited BankIslami Pakistan Limited Meezan Bank Limited National Bank of Pakistan Soneri Bank Limited Standard Chartered Bank (Pakistan) Limited Silk Bank Limited The Bank of Punjab United Bank Limited Summit Bank Limited 06

8 Notice of Annual General Meeting Notice is hereby given that 6th Annual General Meeting of the shareholders of Colony Textile Mills Limited will be held on Monday October 31, 2016 at 10:00 a.m. at Ismail Aiwan-e-Science Building, 205-Ferozepur Road, Lahore to transact the following: 1. To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2016 together with the reports of auditors and the directors thereon. 2. To appoint the auditors and to fix their remuneration for the next financial year Special Business I. To consider and if deemed fit to pass the following resolution as special resolution: Resolved that the Articles of Association of the Company be and is hereby amended by inserting the following new Clause 44-A for E-Voting after Clause 44 of the Articles of Association of the Company for E-voting: Electronic Voting 44-A The provisions and requirements for e-voting as prescribed by the Securities & Exchange Commission of Pakistan for the time being and from time to time shall be deemed to be incorporated in these Articles. In case of E-voting, a member can appoint member and non-member as proxy. This Article meant only for E-voting purposes. The member(s) opting E-voting are required to comply with the requirements of law for the time being in force. Instrument of proxy in relation to E- voting shall be in the following form or in any other form near thereto as may be: I/We, of being a member of the holder of share(s) as per register Folio No./CDC Account No. hereby opt for E-voting through Intermediary and hereby consent the appointment of Execution Officer as proxy and will exercise E-voting as per The Companies (E-voting) Regulations, 2016 or any other prevailing law and hereby demand for poll for resolutions. My secured address is, please send login details, password and electronic signature through . Signature of Member CNIC No: Signed in the presence of: Signature of Witness Signature of Witness Address: Address: CNIC No: CNIC No: II. Resolved that in terms of SRO 470 (1) 2016 of May 31, 2016 issued by Securities & Exchange Commission of Pakistan, approval of shareholders of the Company be and is hereby granted that the Company may transmit its annual audited accounts, directors' and auditor's reports and notice etc. of the Company to its shareholders through CD/DVD/USB instead of sending these in the form of hard/printed copies. Further Resolved that the Company Secretary be and is hereby authorized to do all acts, deed and things, take all steps and actions necessary, ancillary and incidental for altering the Articles of Association of the Company including filing of all requisite documents/statutory forms as required under law with regulatory body(ies). 4. Any other business with the permission of Chairman. Statement under section 160(1) (b) of the Companies Ordinance, 1984 is annexed below. Lahore October 10, 2016 By order of the Board Muhammad Abid Company Secretary 07

9 Notice of Annual General Meeting NOTES: 1 The Share Transfer Books of the Company will remain closed from October 21, 2016 to October 31, 2016 (both days inclusive). 2 A member entitled to attend and vote in the meeting may appoint another member as his/her proxy to attend and vote on his/her behalf. The proxy, in order to be effective, must be received at the registered office of the Company duly signed and stamped not later than 48 hours before the meeting. 3 The members are requested to bring their Folio / Account details (participant ID and sub-account) and original CNIC for identification purpose at the time of meeting. In case of corporate entity, the Board of Director's Resolution or Power of Attorney with specimen signatures of the nominee should be produced. 4 Members are requested: (a) to notify the change of address immediately, if any. (b) to provide the copies of their valid CNIC's if not provided earlier. 5 As per directions of Securities and Exchange Commission of Pakistan, the Company is pleased to offer the members the dispatch of Annual Financial Statements and Notices through . Members desirous to receive the Annual Financial Statements through , may send the standard request form duly filled and signed to the company ensuring that there is sufficient space is available in their mail box to receive this kind of mail. The option may be exercised sending the completed Request Form available at website of the company at 6 The annual audited accounts of the company are available at website of the company at Statement Under Section 160(1) (b) of the Companies Ordinance, 1984 This statement sets out the material facts pertaining to the special business to be transacted at the Annual General Meeting of the Company to be held on October 31, Agenda Item 3 (I). The company is required to make necessary changes in the Articles of Association of the Company in order to cover e-voting mechanism and related matters such as members and nonmembers can also be appointed as proxy. Accordingly the directors have proposed to amend the Articles of Association of the Company in terms of SRO 43(1)/2016 dated January 22, 2016 issued by Securities and Exchange Commission of Pakistan regarding (E-Voting) Regulations In compliance of the said SRO, approval of members is being sought for insertion of new Clause 44-A (Electronic Voting) in the Articles of Association which will facilitate members to be part of decision making in the general meetings of the Company through electronic means. A copy of amended Articles of Association is available with the Company Secretary for inspection of members during office hours. Agenda Item 3 (II). In continuation of SRO 787(1)/2014 dated September 08, 2014, Securities and Exchange Commission of Pakistan had issued a new SRO 470(1)/2016 on May 31, 2016 which permit the companies to disseminate the annual audited accounts, directors' and auditor's reports and notices etc. to shareholders through CD/DVD/USB at their registered addresses instead of sending these in the hard/printed form as per provisions of law subject to the fulfillment of certain requirements. The Company will send hard copy to a member free of cost within a week's time upon receipt of request from member of the Company on his/her request. A standard request form with address details shall remain available at website of the Company at for the convenience of members to communicate their needs to receive the Annual Accounts in printed form. The Directors have no interest in passing of the above resolutions except to the extent of their respective shareholdings in the Company. 08

10 Directors Report to the Members On behalf of the Board of Directors, I present before you the annual report of the company along with audited financial statements for the year ended June 30, In compliance with the Code of Corporate Governance, these financial statements have been endorsed by the Chief Executive Officer and Chief Financial Officer of the company, recommended for approval by the Audit Committee of the Board and approved by the Board of Directors for presentation. Your company has achieved sales of Rupees 11,720 million as compared to the last year sales of Rupees 15,957 million. The gross profit for the year is Rupees 248 million against previous year's gross profit of Rupees 724 million. The bottom line showed a net loss of Rupees 890 million with loss per share of Rupees 1.79 as compared to net loss of Rupees 897 million with loss per share of 1.80 for last year. The performance of the textile sector in the current year was very disappointing. Textile exports of the country recorded a major declining trend. The main reason of this situation is the high cost of doing business as compared to our competitors in the international markets. Textile Industry in Pakistan is facing problems like high cost of energy, heavy taxes, high value of Pak Rupee, intense competition from India and China because of getting subsidies from their Governments and dumping of smuggled yarn and fabric into local markets. Further the Textile Industry is persistently facing the liquidity crunch as major refunds are still unpaid and billions of Rupees are stuck up in Sales tax and Income tax refunds. The performance of the spinning and weaving segments is very disappointing due to the reason that the exporters have been relying on China for last many years and due to slow down in China, yarn and greige fabric exports from Pakistan have declined significantly. The general expectation is that these sectors will continue to remain challenging in Pakistan in future also because of ever increasing cost of doing business. Spinning Segment Considering the overall depressing margins in spinning the performance of this sector of the company is also affected. The current financial year remained difficult and frustrating for spinning business because of significant low demand in local and international markets. Decline in selling prices affected not only the revenue of the segment but the overall revenue of the company. The increase in prices of major yarn products was inconsistent with raw material prices. The significant decrease in Chinese demand together with cheaper Indian yarn in local market resulted into lower profit margins, and resulted in a pressure on local industry to liquidate its inventories on lower prices. On the other hand, China / India's policy to subsidize its yarn manufacturers by giving incentives, suppressed the demand of cotton yarn products in international market which adversely affected the yarn rates. These factors resulted into low profitability in spinning business. Further the shortage of working capital lines is also impairing our profitability. Weaving Segment Owing to higher international competition and depressed cloth prices, the profitability was competitively lower in this division. Demand of greige fabric in international market remained low during this year due to adverse economic conditions and poor quality of available cotton. Sales to China decreased significantly which cause increase in supply of greige fabric in local market hence adversely affecting the prices of greige fabric. One reason of placement of fewer orders by customers was huge pile up of stocks which our customer carried as a result of global economic recession. Stiff competition was really driving all fabric products. 09

11 Directors Report to the Members Under the current economic scenario, competitive international markets, continued availability of subsidized yarn, political uncertainty, energy costs, imposition of GIDC, absence of relief measures to support export oriented sector and other innovative taxes continue to pose a challenge for both the Company and textile industry as a whole. Despite the above limitations, textile industry of Pakistan has been playing pivotal role in driving our national economy with significant contribution to the industrial production, employment generation and foreign exchange earnings. SUB-ORDINARTED LOAN The Sponsor Directors are truly committed to the well being of the company, interest free loan of Rs. 120 million from an Executive Director still exists to support this financial situation. DIVIDEND Considering the financial results of the company for the year ended June 30, 2016 the management has not recommended any dividend in this year. FUTURE OUTLOOK The future outlook of the textile sector is expected to remain tough. In this scenario, the whole industry is looking to the Government to support the textile industry of Pakistan and help it to become competitive globally. Good corporate Governance, marketing quality, production efficiency and financial discipline will remain top focus by the management but optimal results from the textile industry are not possible unless the Government addresses all confronted issues positively. Hence the future results depend upon the response of local and international markets along with business friendly policies of the Government for the textile sector. The company faced with these multifaceted and mounting challenges and has planned to implement major cost cutting measures across the company and is aligning itself to tackle current market threats. Your company is committed to maintain optimum quality, product diversification, exploring new markets and achieving higher production efficiencies but due to tough competition margins are continuously under pressure. AUDIT COMMITTEE This is the most prime and effective committee of the Board. It has a vital role in the compliance of internal controls to ensure safeguard of all the interest of the company, through monitoring of internal audit functions, risk management policies. The committee recommends the appointment of the external auditors and also review the critical reporting made by the internal and external auditors. HUMAN RESOURCE & REMUNERATION COMMITTEE The human resource committee determines the compensation packages for all cadres of the company's employees. The committee is also responsible to create and maintain conducive working environment that instill trust and ensure respect, fair treatment, development opportunity and grooming and make succession plans for all employees. We feel that human resource is key element in our business strategy. 10

12 Directors Report to the Members EXECUTIVE COMMITTEE The executive committee is responsible for setting overall corporate objectives and strategies, identification of opportunities, monitoring the business strategies and plans and there after the successful implementation of those plans. One of the major roles of the committee is to change the management policies and role of the company as required under the changing requirements of local and international customers, keeping in view the strengths and weaknesses of the company, so that the best possible results could be achieved. TECHNICAL COMMITTEE The technical committee acts in an advisory capacity to the CEO, provides recommendation relating to the technical affairs of the company, formulation of technical policies required under the code of corporate governance specially keeping in view the environment protection plans of the Government. It is also responsible for overall factory operations, achievement of desired quality, production targets and efficiency of the mechanical works. This is also empowered to deal with the day to day technical issues under authorized limits. FINANCE COMMITTEE The role of the finance committee is to review and recommend the financial targets, annual and quarterly budgets, approval of the expenditures for amounts with in its limits, investments of the surplus funds of the company and financial policies and controls including the policies required under the code of corporate governance. The committee works under the guidance of CEO. SOCIAL COMPLIANCE AND HUMAN RESOURCE A major factor in your company's success is its highly skilled and motivated workforce. Our strength comes from our people. We can rightly take pride in fact that Human Resources have always been given a high priority. Today, when we look back on past years, we can see that while our objectives may have changed along the way, our human resource policies have always been based on the underlying values of fairness, merit, equal opportunity and social responsibility. These values manifest themselves in our policies of recruitment, performance appraisal, training and development, health and safety and industrial relations. BOARD MEETINGS During the year under review four meetings of the Board of Directors, four meetings of the audit committee and three meetings of human resource & remuneration committee were held. Attendance in the meetings by each director was as under: Directors Name Board of Directors Audit Committee HR Committee Mr. Mughis A Sheikh Mr. Fareed M. Sheikh Mr. Muhammad Tariq Mr. M. Atta Ullah Khan Mr. M. Ashraf Saif Mr. Abdul Hakeem Khan Mr. M. Ikram ul Haq 4-2 Mr. Shahid Waqar Mehmood

13 Directors Report to the Members Code of Ethics and Business Practices has been developed and are communicated and acknowledged by each Director and employee of the company. CORPORATE GOVERNANCE The management ensures that all requirements of the code of corporate governance were complied with. The statement of compliance with the best practices of Code of Corporate Governance is annexed. PATTERN OF SHAREHOLDING AND INFORMATION UNDER CLAUSE XIX(i) OF THE CODE OF CORPORATE GOVERNANCE The pattern of shareholding and information under clause XIX (i) of the Code of Corporate Governance as on June 30, 2016 is annexed. EXTERNAL AUDITOR The present auditor M/S Tariq Abdul Ghani Maqbool & Company, Chartered Accountants, retire and audit committee and board of directors have recommended their reappointment for the ensuing year. The auditors have conveyed that they have been assigned satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan and the firm is fully compliant with code of ethics issued by the International Federation of Accountants (IFAC). Further they are not rendering any related services to the company. The auditors have also confirmed that neither the firm nor any of their partners, their spouses and minor children at any time during the year held or traded in the shares of the company. WEB PRESENCE Annual and periodic financial statements of the Company are also available on CORPORATE AND FINANCIAL REPORTING FRAMEWORK In compliance with the Code of Corporate Governance, we are giving below statements on Corporate and Financial Reporting Framework. The financial statements prepared by the management of the company, presents fairly its state of affairs, the results of its operations, cash flows and changes in equity. The Board of Directors has adopted a vision and mission statement and a statement of overall corporate strategy. Proper books of account of the company as per statutory requirements have been maintained. Code of Ethics and Business Practice has been developed and are communicated and acknowledged by each director and employee of the company. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards, as applied in Pakistan, have been followed in preparation of financial statements. The system of internal control is sound in design and has effectively implemented 12

14 Directors Report to the Members The system of internal control is sound in design and has effectively implemented and monitored. Statement of Compliance with the Code of Corporate Governance is enclosed with this report and this report was found to be in order after review by the auditors. There are no significant doubts upon the company's ability to continue as a going concern. There has been no departure from the best practices of the code of corporate governance, as detailed in the listing regulations. The company strictly complies with the standards of the safety rules and regulations. It also follows environmental friendly policies. No material changes and commitments affecting the financial position of the company have occurred between the end of the financial year to which the balance sheet relates and the date of the Director's Report, except for disclose in the financial statements. Key operating and financial data since incorporation is annexed in summarized form. The directors have not recommended any dividend in view of current financial scenario. Information about outstanding taxes and other Government levies are given in related note(s) to the accounts. The annexed audited accounts give the detail of outstanding taxes and levies. The company operates a contributory provident fund scheme for all employees and defined benefits gratuity fund scheme for its managerial and non managerial staff. The net value of investment in their respective accounts is as under: Provident Funds Gratuity Funds Rs million Rs million The directors, CEO, CFO, Company Secretary and their spouses and minor children have made no transactions in the company's share during the year. ACKNOWLEDGEMENT The Board also wishes to record the appreciation to all the stakeholders for their continuing support to the Company. The management is quite confident that these relations and corporation will continue in the coming years. On behalf of the Board of Directors Lahore Dated: October 10, 2016 Fareed M. Sheikh Chief Executive Officer 13

15 Financial Highlights Year Ended June 30, 2016 Year Ended June 30, 2015 (Rupees 000) Year Ended June 30, 2014 Operating performance Sales-net 11,719, ,653 (895,582) (889,811) 15,957, ,310 (841,851) (896,757) 22,285,945 1,470,102 (33,683) (234,283) Financial position Property, plant 19,157,470 19,103,555 18,703,906 and equipment-net Capital work in progress 453, ,404 1,319,460 Fixed assets 19,610,953 19,790,959 20,023,366 Current assets Stores, spare parts, loose tools 5,398,410 5,492,361 5,421,034 and stock in trade Other current assets 1,428,806 1,422,594 1,825,161 Cash and cash equivalents 56,885 6,884,101 58,271 6,973,226 64,881 7,311,076 Total assets 26,495,054 26,764,185 27,821,622 Current liabilities Short term bank borrowings 4,302,009 1,456,685 4,315,040 1,021,787 4,495,475 1,705,848 Other current liabilities 3,361,196 9,119,890 3,302,093 8,638,920 2,675,167 8,876,490 Number of shares (in thousand) 498, , ,010 Ratios 2.11% 4.54% 7.51% Net loss ratio (7.59%) (5.62%) (1.05%) Loss per share (1.79) (1.80) (0.47) Current ratio Capital structure ratio Debt to equity

16 Statement of Compliance of the Code of Corporate Governance for the Year ended June 30, 2016 This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in clause of the Rule Book of Pakistan Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The company has applied the principles contained in the CCG in the following manner: 1) The company encourages representation of independent non-executive directors and directors representing minority interests on its board of directors. At present the board includes: Category Independent Non-Executive Director Non-Executive Directors Executive Directors Names 1-Mr. Muhammad Ashraf Saif 1-Mr. Mughis A. Sheikh 2-Mr. Muhammad Atta Ullah Khan 3-Mr. Abdul Hakeem Khan Qasuria 4-Mr. Muhammad Ikram-ul-Haq 1-Mr. Fareed M. Sheikh 2-Mr. Muhammad Tariq The independent director meets the criteria of independence under clause (b) of the CCG. 2) listed companies, including this Company. 3) All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company defaulter by the stock exchange. 4) Nominee Director (The Bank of Punjab) resigned during the year. No other nomination from the Bank has been made so far. No other vacancy was occurred during the year. 5) The Company has prepared a 'Code of Conduct' and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures. 6) The Board has developed a vision/mission statement, overall corporate strategy and along with the dates on which they were approved or amended has been maintained. 7) All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors, have been taken by the board/shareholders. 8) The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the board for the purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9) Two members of Board had completed certification in the past years and two members are exempted from the certification requirement. The Company will ensure that the requirements of the code in this respect will be fulfilled as and when required. Internal orientation course(s) were arranged for the directors and key personal s during the year to equip and familiarize them with the changes in law to discharge their duties efficiently. 15

17 Statement of Compliance of the Code of Corporate Governance for the Year ended June 30, ) The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment at the time of their respective appointments. During the year no such appointment was made. 11) The Directors' report for this year has been prepared in compliance with the requirement of the Code of Corporate Governance and fully describes the salient matters required to be disclosed. 12) approval of the Board. 13) The directors, CEO and executives do not hold any interest in the shares of the Company other than those disclosed in the pattern of shareholding. 14) Code of Corporate Governance. 15) The Board has formed an Audit Committee. It comprises three members, of whom all are the non-executive directors and the chairman of the committee is an independent director. 16) the Company and as required by the CCG. The terms of reference of the committee have been formed and advised to the committee for compliance. 17) The Board has formed an HR and Remuneration Committee. It comprises three members, of whom all are Non-Executive Directors and the chairman of the committee is an independent director. 18) The Board has set up an effective internal audit function with competent team members lead by 19) conversant with the policies and procedures of the Company. rating under the Quality Control Review Program of the Institute of Chartered Accountants of International Federation of Accountants (IFAC) guidelines on the code of ethics as adopted by the Institute of Chartered Accountants of Pakistan. 20) The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have AC guidelines in this regard. 21) which may materially affect the market price of Company's security, was determined and intimated to directors and stock exchange. 22) Material/price sensitive information has been disseminated among all market participants at once through stock exchange. 23) The Company has complied with the requirements relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list. 24) have been complied with. On behalf of the Board of Directors Lahore: Dated: October 10, 2016 Fareed M. Sheikh Chief Executive Officer 16

18 Review Report to the Members on Statement of Compliance with the Best Practices of Code of Corporate Governance We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors (the Board) of Colony Textile Mills Limited ( the Company ) for the year ended 30 June 2016 to comply with the requirements of Rule 5.19 of the Rule Book of the Pakistan Stock Exchange where the Company is listed. The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Code. As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board's statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks. The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board for their review and approval, its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code as applicable to the Company for the year ended 30 June October 2016 Tariq Abdul Ghani Maqbool and Company Lahore Chartered Accountants Shahid Mehmood 17

19 Auditors Report to the Members We have audited the annexed Balance Sheet of Colony Textile Mills Limited ("the company") as at 30 June 2016 and the related Profit and Loss Account, Statement of Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: (a) in our opinion, proper books of accounts have been kept by the company as required by the Companies Ordinance, 1984; (b) in our opinion: (i) (ii) (iii) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; the expenditure incurred during the year was for the purpose of the company's business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; 18

20 Auditors Report to the Members (c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan, and give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at 30 June 2016 and of the loss, total comprehensive income, its cash flows and changes in equity for the year then ended; and (d) In our opinion, no Zakat was deductible at source under the Zakat and Usher Ordinance, 1980 (XVIII of 1980). Date:10 October 2016 Tariq Abdul Ghani Maqbool and Co. Lahore Chartered Accountant Shahid Mehmood 19

21 Balance Sheet as at June 30, Note Rupees ('000') Rupees ('000') EQUITY AND LIABILITIES Share Capital and Reserves Authorised capital 530,000,000 ordinary shares of Rs. 10 each Issued, subscribed and paid up capital Reserve arising on amalgamation General reserves Revenue reserves Surplus on remeasurement of investments 7 5,300,000 5,300, ,980,100 4,980,100 3,156,388 3,156,388 4,702 4,702 (364,974) 525, ,776,690 8,667,437 Non-Current Liabilities Long term financing Directors' subordinated loan Liabilities against assets subject to finance lease Deferred liabilities 9 7,223,207 7,758, , , ,371 37, ,447,971 2,270,850 9,823,549 10,186,544 Current Liabilities Trade and other payables Short term borrowings Accrued mark up Current portion of long term liabilities Provision for taxation Contingencies and commitments 13 1,993,536 1,965, ,302,009 4,315, ,329,798 1,172, ,456,685 1,021, , ,736 9,119,890 8,638, ,720,129 27,492,901 Director 20

22 Balance Sheet as at June 30, Note Rupees ('000') Rupees ('000') ASSETS Non-Current Assets Property, plant and equipment Investment property Long term investments Long term deposits ,610,953 19,790, , , ,451 49,650 49,650 19,836,028 20,519,675 Current Assets Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other financial assets Tax refunds due from the Government Cash and bank balances , ,974 5,184,692 5,238, , , , , ,081 92, , ,695 56,885 58,271 6,884,101 6,973,226 26,720,129 27,492,901 21

23 Profit and Loss Account Note Rupees ('000') Rupees ('000') Sales - net 30 11,719,850 15,957,105 Cost of sales 31 11,472,197 15,232,795 Gross profit 247, ,310 Operating expenses: Distribution cost , ,408 Administrative expenses , , , ,841 Operating (loss) / profit (109,753) 261,469 Finance cost ,141 1,150,368 Other operating charges ,342 43,075 1,028,483 1,193,443 Other income ,654 90,123 Loss before taxation (895,582) (841,851) Taxation 37 (5,771) 54,906 Loss after tax for the year (889,811) (896,757) Rupees Rupees Loss per share - basic and diluted 38 (1.79) (1.80) The annexed notes from 01 to 50 form an integral part of these financial statements. Director 22

24 Cash Flow Statement Note Rupees ('000') Rupees ('000') CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Finance cost paid Staff retirement benefit paid Income tax paid Net cash generated from operating activities 48 1,103,002 2,021,115 (345,644) (788,185) (77,042) (53,636) (189,111) (128,415) (611,797) (970,236) 491,205 1,050,879 CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure Proceeds from disposal of property, plant and equipment Investment property Long term deposits Net cash used in investing activities (687,764) (606,773) 1,804 1, , ,543 (374,342) (597,100) CASH FLOWS FROM FINANCING ACTIVITIES Long term finances repaid Lease rentals - Net Short term borrowings - net Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (108,062) (257,771) 2,844 (22,183) (13,031) (180,435) (118,249) (460,389) (1,386) (6,610) 58,271 64,881 56,885 58,271 The annexed notes from 01 to 50 form an integral part of these financial statements. Director 24

25 Statement Of Comprehensive Income Note Rupees ('000') Rupees ('000') Loss for the year (889,811) (896,757) Other comprehensive income: Items that will not be reclassified to profit and loss account: Remeasurement of defined benefit obligation (1,121) - Deferred tax thereon Items that may be reclassified to profit and loss account: Net fair value loss on available for sale investment (874) (62) (76) - TOTAL COMPREHENSIVE LOSS FOR THE YEAR (890,747) (896,833) The annexed notes from 01 to 50 form an integral part of these financial statements. Director 23

26 1 LEGAL STATUS AND NATURE OF BUSINESS 1.01 Colony Textile Mills Limited ("the Company") is a public company limitedby shares incorporated in Pakistan on 12 January 2011 under the provisions of the Companies Ordinance, The company is listed on Pakistan Stock Exchange Limited. The registered officeof the company is located at M. Ismail Aiwan-i-Science, Ferozepur Road, Lahore, Pakistan. The principal activity of the company is manufacturing and sale of yarn, fabrics, garments made ups and trading in real estate. 2 BASIS OF PREPARATION 2.01 Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as notified under the provisions of the Companies Ordinance, Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives shall take precedence Standards, interpretations and amendments to published approved accounting standards The following amendments to existing standards have been published that are applicable to the company's financial statements covering annual periods, beginning on or after the following dates: - Standards, amendments to published standards and interpretations effective in current year Following are the amendments that are applicable for accounting periods beginning on or after 01 July 2015: New/Revised Standards, Interpretations and Amendments IFRS 13- Fair Value Measurement. The standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. The standard only affects the disclosures in the Company's financial statements. Improvement to Accounting Standards Issued by the IASB IFRS 5 IFRS 7 IAS 19 Non-current Assets Held for Sale and Discontinued Operations- (changes in methods of disposal) Financial Instruments: Disclosures- (servicing contracts and applicability of the amendments to IFRS 7 to condensed interim financial statements) Employee Benefits- (discount rate: regional market issue) IAS 34 Interim Financial Reporting- (disclosure of information 'elsewhere in the interim financial report') 26

27 Statement of Changes in Equity Revenue reserves Rupees ('000') Share capital Reserve arising on amalgamation General Reserves Unappropriated Profit/Loss Remeasurement gain/(loss) Total Balance as at 01 July ,980,100 3,156,388 4,702 1,422, ,564,270 Total Comprehensive Income for the year Loss for the year (896,757) - (896,757) Remeasurement of defined benefit obligation Net fair value loss on available for sale investment Total comprehensive loss for the year (76) (76) (896,757) (76) (896,833) Balance as at 30 June ,980,100 3,156,388 4, , ,667,437 Total Comprehensive Income for the year Loss for the year (889,811) - (889,811) Remeasurement of defined benefit obligation Net fair value loss on available for sale investment Total comprehensive loss for the year (874) - (874) (62) (62) (890,685) (62) (890,747) Balance as at 30 June ,980,100 3,156,388 4,702 (364,974) 474 7,776,690 The annexed notes from 01 to 50 form an integral part of these financial statements. Director 25

28 3 FUNCTIONAL AND PRESENTATION CURRENCY These financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency. 4 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits at present value, investment on equity basis, certain liabilities at amortized cost, investment property and certain other investments at fair value. In these financial statements, except for the amounts reflected in the cash flow statement, all transactions have been accounted for on accrual basis. 5 JUDGMENT, ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with approved accounting standards which requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and related assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The estimates and related assumptions are reviewed on an ongoing basis. Accounting estimates are revised in the period in which such revisions are made and in any future periods affected. Significant management estimates in these financial statements relate to the useful life of property, plant and equipment, provisions for staff retirement benefits, doubtful receivables, slow moving inventory and taxation. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which such estimates are revised. Such estimates are: - Useful life of depreciable assets; - Provision for doubtful receivables and slow moving stores, spares and loose tools; - Provision for current tax and deferred tax; - Staff retirement benefits; - Net realisable value of stock-in-trade; and - Impairment of assets. However, assumptions and judgments made by management in the application of accounting policies that have significant effect on the financial statements are not expected to result in material adjustments to the carrying amounts of assets and liabilities in the next year. 6 SIGNIFICANT ACCOUNTING POLICIES 6.01 Staff retirement benefits The Company operates two plans for its employees Defined contribution plan the Company operates recognised defined contributory provident fund for all eligible employees to which monthly contributions are made to cover the obligation. The Company and its employees make equal monthly contributions at the rate of 8.33 percent of basic salary. 28

29 The adoption of the above improvements to accounting standards and interpretations are not likely to have an impact on the Company's financial statements. Standards, interpretations and amendments to published standards that are effective but not relevant to the company The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after 01 July 2015 are considered not to be relevant or to have any significant impact on the company's financial reporting and operations. - Standards, interpretations and amendments to existing standards that are not yet effective The following amendments and interpretations to existing standards have been published and are mandatory for accounting periods beginning on or after their respective effective dates. IFRS 10 - Consolidated Financial Statements 01 January 2016 IFRS 11 - Joint Arrangements 01 January 2016 IFRS 12 - Disclosure of Interests in Other Entities 01 January 2016 IAS 16 and 38 - Clarification of Acceptable Method of Depreciation and Amortization 01 January 2016 IAS 16 and 41 - Agriculture: Bearer Plants 01 January 2016 The above standards, amendments and interpretations are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements except for the increased disclosures in certain cases. In addition to the above, the following new standards have been issued by IASB which are yet to be notified by the SECP for the purpose of applicability in Pakistan. Standard or Interpretation Effective Date (Annual periods beginning on or after) IFRS 09 - IFRS 14 - IFRS 15 - IFRS 16 - Financial Instruments: Classification and Measurement Regulatory Deferral Accounts Revenue from Contracts with Customers Leases 01 January January January January

30 Capital work in progress Capital work in progress is stated at cost less identified impairment loss, if any, and includes the expenditures on material, labour and appropriate overheads directly relating to the construction, erection or installation of an item of property, plant and equipment. These costs are transferred to property, plant and equipment as and when related items become available for intended use. Assets subject to finance lease These are stated at the lower of present value of minimum lease payments under the lease agreements and the fair value of the assets. The related obligations of lease are accounted for as liabilities. Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of financial cost on the remaining balance of principal liability for each period. Depreciation is charged on the basis similar to owned assets applying reducing balance method to write off the cost of the asset over its estimated remaining useful life in view of certainty of ownership of assets at the end of the lease period. Insurance and other maintenance costs are borne by the Company. Financial charges and depreciation on leased assets are charged to income currently Investment property Property held to earn rentals and/or for capital appreciation is classified as investment property. Investment properties are initially measured at cost, including transaction cost. Subsequent to initial recognition, investment properties are stated at fair value, which effect market conditions at reporting date. Gains and losses arising from the change in fair value of properties are included in profit and loss in the year in which they arise. Fair values are determined based on an annual evaluation performed by an independent valuer Investments Recognition Investments in securities are recognized on settlement date basis of accounting. Measurement (i) Financial assets at fair value through profit and loss (Held for trading) These securities are either acquired for generating a profit from short term fluctuations in prices or securities included in a portfolio in which a pattern of short term profit taking exists. These investments are initially measured at fair value being the consideration given. On subsequent reporting dates, these are measured at fair values on quoted market price and unrealized gains and losses arising from changes in the fair values are recognized in the profit and loss account of the period in which these arise. (ii) Investments held to maturity These are securities with fixed or determinable payments and fixed maturity where the Company has a positive intent and ability to hold till maturity. These are initially measured at fair value being the consideration given plus transactions' costs that are attributable to the acquisition of these investments. At subsequent reporting dates, these are measured at amortized cost using effective interest rate method. Mark-up calculated using the effective interest rate method is recognized in the profit and loss account. Impairment loss, if any, is recognized in the profit and loss account in the period in which it arises. 30

31 Defined benefit plan The Company operates an defined benefit plan for all its eligible employees who have completed their minimum qualifying period of service with the Company. Provisions are made in the financial statements to cover obligation on the basis of actuarial valuation using the Projected Unit Credit Method. Any actuarial gain or loss arisen is recognized immediately in other comprehensive income Taxation Current Provision for current taxation is based on applicable current rates of taxation after taking into account tax credits and rebates available, if any, under the provisions of Income Tax Ordinance, The tax charge also includes adjustments, where necessary, relating to prior years which arise from assessments finalized during the year. Deferred Deferred tax liability is accounted for in respect of all taxable temporary differences at the balance sheet date arising from difference between the carrying amount of the assets and liabilities in the financial statements and corresponding tax bases. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses, provisions and tax credits to that extent it is probable that taxable profit will be available in future against which the deductible temporary differences can be utilized. In this regard, the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release 27 of Institute of Chartered Accountants of Pakistan. Deferred tax is calculated at the rates that are expected to apply to the period when the asset is to be realized or liability is to be settled Property, plant and equipment Operating fixed assets Operating fixed assets are stated at cost less accumulated depreciation and any accumulated impairment losses (if any) except freehold land which is stated at cost and fully depreciated assets which are carried at residual value. Cost includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is charged to profit and loss account by applying reducing balance method to write off the cost over estimated remaining useful life of assets. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from property, plant and equipments. Depreciation on addition to property, plant and equipment is charged from the date when asset is available for use up to the date of its de-recognition. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains / losses on disposal of fixed assets are included in current year's income. Subsequent costs are included in the asset's carrying amount are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and cost of the item can be measured reliably. All other repair and maintenance cost are charged to the profit and loss account during the year in which these are incurred. 29

32 Cost in relation to work in process and finished goods represents the average manufacturing cost which consists of prime cost and attributable production overheads. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale Trade debts and other receivables Receivables are carried at original invoice amount less an estimate made for doubtful receivable balances based on review of outstanding amounts at year end. Bad debts are written off when identified Cash and cash equivalents Cash and cash equivalents comprise of cash in hand and at banks Borrowings Loans and borrowings are recorded at the proceeds received. Financial charges are accounted for on the accrual basis. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are charged to income in the period in which these are incurred Trade and other payables Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services Provisions Provisions are recognized when the Company has a legal and constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle these obligations and a reliable estimate of the amounts can be made Impairment Financial assets The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing a significant financial deficiency, default of delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. 32

33 (iii) Investments available for sale These represent investments that do not fall under "financial assets at fair value through profit and loss" or "held to maturity" categories. These are initially recognized at fair value being the consideration given plus transaction costs that are attributable to the acquisition of these investments. On subsequent reporting date, these investments are remeasured at fair values on quoted market prices. Unrealized gains and losses arising from changes in the fair value of investments are recognized directly in equity through other comprehensive income until the investment is derecognized. Impairment loss, if any, is recognized in the profit and loss account in the period in which it arises. (iv) (v) Investments in associates and related parties Investment in associates and related parties where the Company can exercise significant influence; has intention and ability to hold the investment for more than twelve months of acquisition and are not held for sale are accounted for using the equity method of accounting. Impairment in value, if any, is recognized in the profit and loss account in the period in which it arises. Investment in unquoted securities Investment in unquoted securities are initially measured at cost. Impairment loss, if any, is charged to income Contingencies The Company has disclosed significant contingent liabilities for the pending litigation and claims against the Company based on its judgment and the advice of the legal advisors for the estimated financial outcome. The actual outcome of these litigations and claims can have an effect on the carrying amounts of the liabilities recognised at the balance sheet date. However, based on the best judgment of the Company and its legal advisors, the likely outcome of these litigations and claims is remote and there is no need to recognise any liability at the balance sheet date Stores, spares and loose tools These are valued at lower of cost and net realizable value. Cost is calculated using moving average method except for items in transit which are valued at cost comprising invoice value plus other charges paid thereon till the balance sheet date. Provision is made against obsolete items Stock in trade Basis of valuation are as follows Particulars Raw materials: At mills In-transit Work in process Finished goods Waste At lower of weighted average cost and net realizable value At cost accumulated to the balance sheet date At average manufacturing cost At lower of average manufacturing cost and net realizable value At net realizable value 31

34 Non financial assets The company assesses at each balance sheet date whether there is any indication that assets except deferred tax assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in profit and loss account. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the carrying amount that would have been determined, had no impairment loss been recognized for assets in prior year. Reversal of impairment loss is recognized as income. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense Revenue recognition (i) (ii) (iii) (iv) (v) Local sales are recorded when goods are delivered to customers and invoices raised. Export sales are booked on shipment basis. Processing charges are recorded when goods are delivered to customers and invoices raised. Dividend income is recognized when the right to receive payment is established. Profits on short term deposits is accounted for on time apportioned basis on the principal outstanding and at the rate applicable Related party transactions Transactions with related parties are based on the transfer pricing policy that all transactions between the Company and the related party of the Company are at arm's length prices using the comparable uncontrolled price method except in circumstances where it is in the interest of the Company not to do so Dividend Dividend is recognized as liability in the period in which it is declared Foreign currency translations Transactions in foreign currencies are accounted for in Pak rupees at the rates of exchange prevailing at the date of transaction. Monetary assets and liabilities in foreign currencies are translated at rates of exchange prevailing at the balance sheet date and in case of forward exchange contracts at the committed rates. Gains or losses on exchange are charged to income Financial instruments All financial assets and financial liabilities are initially measured at cost which is the fair value of the consideration given and received respectively. These financial assets and financial liabilities are subsequently measured at fair value, amortized cost as the case may be. All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instruments. Any gain/loss on de-recognition and on remeasurement of such financial instruments other than investments available for sale, is included in the profit/loss for the period in which it arises. 33

35 6.20 Off Setting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, when there is a legally enforceable right to set off the recognized amounts and the Company intends to either settle on net basis or to realize the asset and settle the liability simultaneously. Corresponding income on assets and charge on liabilities is also offset Earnings per share (EPS) Basic EPS is calculated by dividing the profit and loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit and loss attributable to ordinary shareholders of the Company that would result from conversion of all dilutive potential ordinary shares into ordinary shares Segment reporting Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the chief executive to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the chief executive include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those incomes, expenses, assets, liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are reported as unallocated. The Company has two reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibres) and Weaving (Producing different quality of fabric using yarn). Transaction among the business segments are recorded at arm's length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total Share capital Ordinary shares are classified as equity. Incremental cost directly arrtibutable to the issue of new shares are shown in equity as deduction, net of tax, from the proceeds. 34

36 Note Rupees ('000') Rupees ('000') 7. AUTHORIZED SHARE CAPITAL 185,000,000 (2015: 185,000,000) ordinary shares 1,850,000 1,850,000 of Rs. 10/- each Capital of merged companies 345,000,000 (2015: 345,000,000) ordinary shares of Rs. 10/- each 3,450,000 3,450, ISSUED, SUBSCRIBED AND PAID UP CAPITAL 5,300,000 5,300,000 20,000 (2015: 20,000) ordinary shares of Rs. 10 each issued as fully paid shares 497,989,959 (2015: 497,989,959) fully paid ordinary shares of Rs. 10 each issued to the shareholders of amalgamated entities ,979,900 4,979,900 4,980,100 4,980,100 - Fully paid ordinary shares, which have a par value of Rs. 10/-, carry one vote per share and carry right to dividends. - There are no rights, preferences and restrictions attached to any class of shares including restrictions on the distribution of the dividends and the repayment of capital. - There are no shares reserved for issue under options and contracts for the sale of shares. 35

37 Note Rupees ('000') Rupees ('000') 9. LONG TERM FINANCING From banking companies-secured Name of the Bank Type of finance Bank Islami Pakistan Limited (formerly KASB Bank Limited) DF , ,761 Faysal Bank Limited TF ,393 92,411 Habib Bank Limited TF - IV ,962 99,962 National Bank of Pakistan DF , ,000 National Bank of Pakistan DF - IV ,444 45,444 National Bank of Pakistan DF - V , ,400 Soneri Bank Limited DF ,002 70,835 Soneri Bank Limited DF - I , ,231 Soneri Bank Limited DF - II , ,356 The Bank of Punjab TF l ,640,871 6,732,861 From other financial institutions-secured Saudi Pak Industrial and Agricultural Investment Company Limited ,021 6,042 8,645,241 8,753,303 Less: Current portion (1,422,034) (995,122) 7,223,207 7,758, This facility has been obtained from Bank Islami Pakistan Limited (Formerly KASB Bank Limited) with restructuring on November The loan is repayable in quarterly instalments. This facility contains demand finance -I with final maturity on 31 December Mark-up is accrued on the basis of 3 months KIBOR (2015: 3 months KIBOR) per annum payable in two years through 24 equal monthly instalments starting after settlement of principal payment in December 2022 by the Company. The loan is secured against ranking & joint pari passu charge on the present and future assets of the Company and personal guarantees of two directors of the Company This loan facility has been obtained from Faysal Bank Limited and is repayable in quarterly instalments, with final maturity on 30 September Mark-up is payable at the rate of 3 months KIBOR (2015: 3 month KIBOR) per annum and is payable quarterly. The loan is secured against second ranking pari passu charge of Rs. 200 million over fixed assets of the Company and personal guarantee of two directors of the Company. 36

38 9.08 The purpose of this facility is restructuring/ rescheduling of existing principal liability outstanding against DF, TF-1, TF-2 and acceptance inland to the tune of Rs million. Loan is repayable in 75 monthly instalments of Rs million starting from 31March The remaining number of outstanding instalments are 38. Mark up is payable at the rate 3 month KIBOR. The effective mark-up rate charged during the year ranges from 6.35% to 7.01% (2015: 8% to 10.21%) per annum. The loan is secured against joint pari passu charge of Rs million over land situated at Mahal Muzaffarabad along with all present and future fixed assets. RM of Rs. 5 million & EM of Rs. 400 million over plot located at Garden Town Sher Shah Road Multan valuing Rs. 263 million. Special hypothecation charge of Rs million over plant and machinery imported through the bank The purpose of this facilityis restructuring of overdue mark up. Loan is repayable in monthly instalmentscommencing from 31 March 2012 and maturing on 31 January The remaining number of outstanding instalmentsare 70. No mark up is payable on this facility This loan facility has been restructured during the year by merging the Term Finance Facilities (TF, TF I and TF II) amounting to Rs. 3, million and 3, million as on 30 December The loan is repayable on quarterly basis in 15 years (60 quarters) commencing from 31 December 2015 to 30 September Mark-up is payable at the rate of 6% or cost of funds (COF) less administrative cost of preceding quarter commencing from 30 September 2026 to 30 September This facility is collaterally secured by: - joint pari passu charge over the fixed assets of the company of Rs. 9,986 million. - exclusive mortgage charge on the Company's land of Rs. 5,266 million. - joint pari passu charge over the current assets of the Company of Rs. 1,147 million. - ranking charge over the current assets of the Company for Rs. 664 million. - debt subordinated loan of Rs. 120 million. - pledge of 15,862,960 shares of Imperial Sugar Limited held by customers. - pledge of 1,853,957 shares of Imperial Sugar Limited in physical form. - personal guarantee of one director with his personal net worth statement This facility has been obtained from Saudi Pak Industrial and Agricultural Investment Company Limited and is repayable in 36 monthly instalments, commencing from April Mark-up is 3 month KIBOR plus 2.5% (2015: 3 month KIBOR plus 2.5 %) per annum. The loan is secured against existing joint pari passu charge of Rs. 94 million over fixed assets of the company and personal guarantee of a director. 38

39 The loan is repayable in 16 equal quarterly instalments of Rs million commencing from June 30, Mark up is payable at the rate of 3 months KIBOR plus 2.5% (in case of timely payments effective mark up rate would be 3 months KIBOR plus 2.5%). The effective mark up rate charged during the year ranges from 8.85% to 9.51% (2015: 9.31% to 12.66%) per annum. This finance facility is secured against joint parri passu charge on fixed assets of the company along with personal guarantee of a director. This loan facility has been obtained from National Bank of Pakistan and is repayable in 20 equal quarterly instalment. Mark-up is payable at the rate of 7% (2015: 7%) per annum. The loan is secured against first pari passu /first joint pari passu charge of Rs. 434 million over fixed assets of the Company. The Company has applied for rescheduling of this finance facility. Therefore, the Company has not made principal payment of Rs. 140 million (2015: Rs. 140 million) during the year. The matter of rescheduling is under consideration of National Bank of Pakistan and is in final stage The purpose of this facility is to finance the purchase of new fixed assets of the Company. The loan is repayable from the Company's own cash flows in 24 quarterly instalments of Rs million each commencing from 19 March The remaining number of outstanding instalments are 05 as at balance sheet date. Mark up is payable at the rate of 3 months KIBOR plus 2%. The effective mark up rate charged during the year ranges from 8.85 % to 9.51% (2015 : 10.50% to 12.71%) per annum. This finance facility is secured against first pari passu charge of Rs. 937 million over fixed assets of the Company to the extent of Rs. 334 million and personal guarantees of directors. The Company has applied for rescheduling of this finance facility. Therefore, the Company has not made principal payment of Rs million (2015: Rs million) during the year. The matter of rescheduling is under consideration of National Bank of Pakistan and is in final stage This loan has been availed for restructuring of balance sheet of the Company by converting short term liabilities into long term liabilities through adjustments / reduction of short term credit facilities. The loan is repayable in 20 equal quarterly instalments commencing from 30 September The remaining number of outstanding instalments are 18 as at balance sheet date. Mark up is payable at the rate of 3 months KIBOR plus 2.50% per annum. The effective mark up rate charged during the year ranges from 8.85% to 9.51% (2015: 10 % to %) per annum. This finance facility is secured against first joint pari passu charge over fixed assets of the Company with 30% margin by utilizing the cushion available in existing first joint pari passu charge over fixed assets of the Company on the basis of outstanding balance of DF - V and required joint pari passu charge for short term credit facilities and personal guarantee of a director. The Company has applied for rescheduling of this finance facility. Therefore, the Company has not made principal payment of Rs million (2015: million) during the year. The matter of rescheduling is under consideration of National Bank of Pakistan and is in final stage The facility has been obtained from Soneri Bank Limited and is to be repaid in 30 equal quarterly instalments starting from February Mark-up is payable at the rate of 3 month KIBOR (2015: 03 month KIBOR) per annum. The loan is secured against existing joint pari passu charge of Rs. 350 million over fixed assets of the Company and personal guarantees of two directors of the company. 37

40 12. DEFERRED LIABILITIES Deferred taxation ,304 49,554 Deferred mark up ,292,417 2,199,009 Staff retirement benefits ,250 22, Deferred taxation Deferred taxation comprises of the following: Deferred tax liability on taxable temporary differences in respect of the following: 2,447,971 2,270,850 - Accelerated tax depreciation allowance 1,858,365 1,509,968 Deferred tax asset on deductible temporary differences in respect of the following: - Unused tax losses to the extent of available taxable temporary differences 1,261,092 1,074,348 - Finance lease liabilities 14,752 12,528 - Minimum tax available for carry forward 463, ,036 - Provision for stores, spares and loose tools 366 1,271 - Provision for doubtful debts Staff retirement benefits 10,867 4,351 1,751,061 1,460, ,304 49,554 Deferred mark up Opening balance 4,347,285 4,209,295 Provision during the year 537, ,790 4,884,430 4,351,085 Less: paid during the year 204,447 3,800 4,679,983 4,347,285 Present value adjustment 2,387,566 2,148,276 2,292,417 2,199,009 This deferred mark-up has been discounted using effective rate of interest and classified separately in non current liabilities and profit and loss account Staff retirement benefits - unfunded gratuity scheme Rupees ('000) Rupees ('000) (a) Reconciliation of amounts recognized in the balance sheet: Rupees ('000) Rupees ('000) It represents mark up deferred by Faysal Bank Limited, KASB Bank Limited, Soneri Bank Limited and Bank of Punjab. It is payable starting from January 2021 and maturing on 30 September Present value of defined benefit obligation 48,250 22,287 Net liability at the end of the year 48,250 22,287 Note 40

41 10. DIRECTORS' SUBORDINATED LOAN Note Rupees ('000') Rupees ('000') Directors' subordinated loan 120, , LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE 120, ,000 Present value of minimum lease payments 67,022 64,178 Less: Current portion (34,651) (26,665) This is unsecured and interest free loan obtained from sponsor director, and is not repayable within next twelve monthsfrom the balance sheet date. This loan is subordinated to The Bank of Punjab, Standard Chartered Bank Limited, Meezan Bank Limited and Faysal Bank Limited. The amount of future payments and the years in which these will become due are: 32,371 37,513 These represent machinery under sale and lease back agreements. The principal plus financial charges are payable over the lease period in quarterly instalments as per respective agreements ending in the month of May The liability as at balance sheet date represents the present value of total minimum lease payments discounted at 7.99 % to % per annum being the interest rates implicit in leases. The purchase option is available to the Company on payment of last instalment and surrender of deposit at the end of lease period and the Company intends to exercise this option. Reconciliation of minimum lease payments and their present values is given below: Not later than one year 56,879 32,487 Later than one year but not later than five years 37,346 43,489 Later than five years 2,924-97,149 75,976 Less: Financial charges allocated to future periods (30,127) (11,798) Present value of minimum lease payments 67,022 64,178 Less: Current portion (34,651) (26,665) 32,371 37, Note Rupees ('000') Rupees ('000') Present value of minimum lease payments Due not later than one year 34,651 26,665 Due later than one year but not later than five years 32,371 37,513 Later than five years ,022 64,178 39

42 (b) Movement in net liability Rupees ('000) Rupees ('000) Net liability at beginning of the year 22,287 40,117 Charge for the year 101,884 35, ,171 75,923 Remeasurements chargeable in other comprehensive income - - Benefits paid during the year (77,042) (53,636) Net liability at end of the year 48,250 22,287 ( c ) Changes in the present value of defined benefit obligation Defined benefit obligation at beginning of the year 22,287 40,117 Current service cost 99,760 34,445 Interest Cost 2,124 1, ,171 75,923 Remeasurements chargeable in OCI 1,121 - Benefits paid during the year (77,042) (53,636) Present value of defined benefit obligation at end of the year 48,250 22,287 (d) Charge for the year Current service cost 99,760 34,445 Interest Cost 2,124 1, ,884 35,806 (e) The principal assumptions used in the actuarial valuation are as follows: Discount rate 7.25% 13.25% Expected rate of increase per annum in future salaries 6.25% 12.25% Expected average remaining working life of employees 3 years 4 years Mortality rate SLIC set back 1 year Sensitivity analysis for actuarial assumptions The following table summarizes how the net defined benefitobligation at the end of the reporting period would have increased/ (decreased) as a result of change in respective assumptions. Change in assumptions Increase Rupees ('000) Decrease Rupees ('000) Discount rate 1% 40,565 48,654 Increase in future salaries 1% 48,555 39,655 41

43 A change in expected remaining working lives of employees is not expected to have a material impact on the present value of defined benefit obligation. Accordingly, the sensitivity analysis for the same has not been carried out. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of defined benefit obligation as at the reporting date has been calculated by using projected unit credit method, which is the same as that applied in calculating the defined benefit obligation to be recognized in these financial statements. Effects of retrospective application of change in accounting policy are as follows: Risk factors The defined benefit plan exposes the Company to the following actuarial risks: Interest risk: The discount rate used in determination of present value of defined benefit obligation has been determined by reference to market yield at the reporting date on Pakistan Investment Bonds since there is no deep market in long term corporate bonds in Pakistan. An increase in market yield resulting in a higher discount rate will decrease in the defined benefit liability. Longevity risk: The present value of defined benefit obligation is calculated by reference to the best estimate of the expected remaining working lives of the employees. An increase in the expected remaining working lives will increase the defined benefit obligation. However, the increase is not expected to be material. Salary risk: The present value of defined benefit obligation is calculated by reference to future salaries of employees. An increase in salary of employees will increase the defined benefit obligation. 13. TRADE AND OTHER PAYABLES Note Rupees ('000') Rupees ('000') Trade creditors 997, ,585 Accrued liabilities 406, ,085 Bills payables 446, ,769 Advance from customer 89, ,280 Withholding tax payable 45,862 90,687 Unclaimed dividend 1,328 1,328 Others 6,267 6,624 1,993,536 1,965, Bills payable include overdue amount of Rs. 274 (2015: ) million payable to National Bank of Pakistan and Faysal Bank Limited. 14. SHORT TERM BORROWINGS Banking companies - secured 4,302,009 4,315,040 42

44 Short term borrowings are available from banking companies under mark-up arrangements. The rates of mark up range from 4.60% to 13.80% per annum (2015: 7.21% to 14.64%). These are secured against pledge / hypothecation of stock-in-trade, hypothecation of stores and spares, lien over import / export documents, pari passu charge over present and future current assets of the Company. From the total aggregate short term facilities of Rs. 4, million (2015: 4, million), the amount of Rs (2015: Rs ) million remained unutilized as at 30 June ACCRUED MARK UP Accrued mark up on: Long term financing 402, ,462 Liabilities against assets subject to finance lease 12,987 9,345 Short term borrowings 914, ,192 1,329,798 1,172, CURRENT PORTION OF LONG TERM LIABILITIES Rupees ('000') Rupees ('000') Long term financing 1,422, ,122 Liabilities against assets subject to finance lease 34,651 26,665 1,456,685 1,021, Current portion of long term financing includes principal installments amounting to Rs (2015: 738) million which became due for reasons as disclosed in note No PROVISION FOR TAXATION Opening balance 163, ,743 Add: Taxation - current 37, , , ,479 Less: Tax payments /adjustments during the year 163, ,743 37, , CONTINGENCIES AND COMMITMENTS Contingencies Multan Electric Power Company Limited (MEPCO), taken-over by WAPDA in May 1981, had served notice on the Company under Martial Law Regulation No. 125 of 1972 for payment of Rs million on account of cost of two transformers and gridstation along with benefits derived and interest accrued thereon up to April 1981as against a liability of Rs million admitted by MEPCO in the written statements filed by it in the civil suit instituted by the Company before the Senior Civil Judge, Lahore. The Company challenged the illegal proceedings through a writ petition in the Lahore High Court which is at the stage of intracourt appeal pending before the Lahore High Court, Multan Bench and in which a stay order has been issued against a bank guarantee of Rupees 1.10 million arranged by the Company. MEPCO on the other hand owes to the Company Rupees million (including unpaid dividend and interest thereon not incorporated in these financial statements). A suit has been filed by the Company for recovery of balance amount which is pending with the Court of Senior Civil Judge, Lahore. 43

45 The Collectors of Customs, Sales Tax and Central Excise, in preceding years raised a demand of Rs million relating to inadmissible input tax claim of sales tax on sui gas bills, transformers and high power cables. In addition to the above, the Collector also raised demand of sales tax on inadmissible input tax on electricity bills amounting to Rs million. The Company has filed an appeal with Customs, Excise and Sales Tax Appellate Tribunal against the aforementioned orders which is still pending adjudication with the Tribunal. The Company has deposited Rs million against demand raised by the Collector in respect of inadmissible input tax on electricity, under the directions of the Tribunal. The Company has deposited Rs million as one-fourth of the demand of Rs million raised in respect of other issues. The case is pending adjudication with the Tribunal and the Company expects a favourable outcome in this regard. The Company imported textile machinery availing exemptions from customs duty and sales tax on import thereof under S.R.Os. 554(I)/97, 987 (I)/99, and 439(I)/2001. The Company has submitted indemnity bonds to the customs authorities in this regard. In case, the conditions of above mentioned S.R.Os are violated, the amount of customs duty and sales tax exempted aggregating Rs million shall be recovered along with such penalties imposed in this regard under section 202 of the Customs Act, The conditions of the said SRO vis-à-vis export of 50% of additional production during first three years and 60% of the additional production during subsequent two years has been complied with. Audit of first three years has been conducted by the department and has given compliance certificate and audit of second period is in the process. Since all the conditions have been complied with, no liability will accrue in this respect. In 1981, the Company issued non-convertible debentures to a consortium of banks and financial institutions. Subsequently, under authority of State Bank of Pakistan s circular No.19 dated June 05, 1997, the Company arrived on a settlement with all but one lender, State Life Insurance Corporation of Pakistan (SLIC), for its share of less than Rs. 01 million. On a petition by the Company, the Lahore High Court, Lahore, decreed the case in favour of the Company. However SLIC has filed an intra-court appeal against which the Company expects a favourable outcome. The Company filed a suit in the Court of Civil Judge, Multan for recovery of Rs.2.49 million from Cotton Trading Corporation of Pakistan Limited on account of loss of profit, damages and shortages caused due to nationalization of Model Ginning & Oil Mills Limited. In 1996, the Court issued a decree in favour of the Company for Rs million along with interest at the rate of 7% per annum to be calculated from the date of institution of the suit until the date of realization of the decreed amount. The Company, however, has not accepted the said decision and filed a writ petition with the Lahore High Court, Multan Bench which is pending for adjudication The Company has filed an appeal before the Appellate Tribunal, Customs, Central Excise & Sales Tax, Lahore under Section 46 of the Sales Tax Act, 1990 against rejection of its refund claim amounting to Rs. 3.21million on account of sales tax paid on processed fabrics, by the Collector of Customs, Central Excise & Sales Tax (Appeals) Lahore Bank guarantees amounting to Rs (2015: Rs million) Rs. in million Rs. in million Commitments Under letters of credit for the import of raw material

46 Free hold land Building on free hold land Plant, machinery & equipment Factory tools and equipment Furniture & fixture Office and hospital equipment Library books Vehicles Leased Plant and machinery At 30 June 2015 Cost 2,024,151 3,482,394 17,287, ,740 40,459 32, , ,344 11,354 24,235,949 Accumulated depreciation - (830,365) (3,600,091) (91,841) (22,630) (19,169) (44) (72,095) (488,246) (7,913) (5,132,394) Net book value in Rupees ('000) 2,024,151 2,652,029 13,687, ,898 17,829 13,648-51, ,098 3,440 19,103,555 Annual rates (%) of depreciation At 30 June 2016 Cost 2,024,151 3,583,130 18,094, ,840 41,394 34, , ,927 11,354 25,154,099 Accumulated depreciation - (965,506) (4,291,522) (109,989) (23,548) (20,607) (44) (74,315) (502,841) (8,257) (5,996,629) Net book value in Rupees ('000) 2,024,151 2,617,624 13,803, ,850 17,846 13,589-47, ,086 3,096 19,157,470 Annual rates (%) of depreciation Leased Vehicles Total Depreciation charge for the year has been allocated as follows: Rupees ('000) Rupees ('000) Cost of Sale 852, ,335 Administrative Expenses 15,131 14, DISPOSAL OF PROPERTY, PLANT & EQUIPMENT 867, ,786 The following operating fixed assets with a net book value exceeding Rs. 50,000 were disposed off during the year: PARTICULARS COST ACCUMULATED DEPRECIATION NET BOOK VALUE SALE PROCEEDS PROFIT MODE OF DISPOSAL BUYER'S NAME Honda City - MLG Negotiation KIA Ceres - MNT ,700 1, Negotiation Suzuki Mehran - LZC Negotiation Hyundai Shahzore - LRO Negotiation Rupees ('000) ,535 2, ,804 1,259 Rupees ('000) , , Zeeshan Khan M. Asghar Javed Khaliq Umer Sultan No impairment relating to operating fixed assets has been recognised in the current year. 30 June June Capital work in progress Rupees ('000) Rupees ('000) Plant and machinery 350, ,814 Civil work 103, ,590 Total 453, ,404 Movement in capital work in progress Opening 687,404 1,319,460 Addition during the year 566,079 68,461 1,253,483 1,387,921 Transferred to Operating Assets (800,000) (700,517) Closing 453, , Charge/mortgage on fixed assets has been disclosed in respective notes The company's obligation under finance lease are secured by lessor's title to the leased assets, which have a carrying amount of Rs million (2015: Rs million) Addition in plant and machinery includes capitalization of borrowing cost of Rs million (2015: Rs million). 46

47 19 PROPERTY, PLANT AND EQUIPMENT Note Rupees ('000) Operating assets ,157,470 19,103,555 Capital work in progress , ,404 19,610,953 19,790, The following is a statement of operating fixed assets (tangible): Rs. ('000) At 30 June 2014 Free hold land Building on free hold land Plant, machinery & equipment Factory tools and equipment Furniture & fixture Office and hospital equipment Library books Vehicles Leased Plant and machinery Cost 2,024,151 3,231,945 16,308, ,184 38,530 30, , ,344 11,354 22,998,400 Accumulated depreciation - (703,930) (2,930,366) (72,800) (21,750) (17,863) (44) (67,232) (472,978) (7,531) (4,294,494) Net book value 2,024,151 2,528,015 13,378, ,383 16,780 12,401-54, ,366 3,822 18,703,906 Year ended 30 June 2015 RUPEES ('000) Leased Vehicles Total Additions/Transfer ,279 1,556 1,929 2,553-2, ,312 Transfers from capital work in progress - 250, , ,517 Disposals (note 19.02) Cost - - (380) (900) - - (1,280) Depreciation Net book value - - (332) (271) - - (603) Depreciation charge for the year 19.01) - (126,435) (669,773) (19,041) (880) (1,306) - (5,492) (15,268) (382) (838,577) Net book value as at 30 June ,024,151 2,652,029 13,687, ,898 17,829 13,648-51, ,098 3,440 19,103,555 Year ended 30 June 2016 Additions , ,379-1,764 9, ,685 Transfers from capital work in progress - 99, , ,000 Disposals (note 19.02) Cost (3,535) - - (3,535) Depreciation , ,990 Net book value (545) - - (545) Depreciation charge for the year (note19.01) - (135,141) (691,431) (18,148) (918) (1,438) - (5,210) \ (14,595) (344) (867,225) Net book value as at 30 June ,024,151 2,617,624 13,803, ,850 17,846 13,589-47, ,086 3,096 19,157,470 45

48 Due to non availability of annual audited financial statements of Imperial Sugar Limited at the date of authorization for issue of these financial statements, equity method has been applied on latest available un-audited financial statements for nine month ended 30 June 2016/2015 and audited financial statement for the quarter ended 30 September 2015/ Investment - available for sales Stores Spares Loose tools Quoted - at fair value Colony Woolen Mills Limited Azgard Nine Limited Colony Thal Textile Mills Limited Unquoted - at cost Government Compensation Bonds Government Compensation Bonds for Rs. 0.4 million (2015: Rs. 0.4 million) are receivable from the Federal Government in respect of shares held by the Company in the share capital of Multan Electric Supply Company Limited. The Company has challenged the withholding of these Bonds through writ petition filedin the Lahore High Court, Lahore, which is still pending for final adjudication STORES, SPARE PARTS AND LOOSE TOOLS Note Rupees ('000') Rupees ('000') Provision for slow moving items 23. STOCK IN TRADE Textile Raw material Work in process Finished goods Real Estate Business Land held for development and resale No. of Shares / Bonds Rupees ('000') Rupees ('000') This includes 65.9 kanals of land mortgaged with bank as mentioned in note ,506 70, ,457 67, , , , , , , ,028 95,444 63, , ,486 1,664 (6,512) 213, , Provision for slow moving items Opening balance 6,512 4,570 Provision made during the year 1,664 1,942 8,176 6,512 Less: Provision written off during the year 6,512 - Closing balance 1,664 6, , , , ,652 3,808,156 3,713,376 4,687,945 4,741, , ,747 5,184,692 5,238,387 48

49 20. INVESTMENT PROPERTY Opening balance Disposal during the year Note Rupees ('000') Rupees ('000') 431, ,615 (431,615) ,615 Investment property was sold to The Bank of Punjab through an agreement dated December 30, 2015 against a total consideration of Rs million to settle the liability of the same amount with the bank. Due to revaluation of the property at the time of sale, the company has incurred the loss of Rs million that is accounted for in these financial statements. The agreement has a purchase back option after a period of three years LONG TERM INVESTMENTS Note Rupees ('000') Rupees ('000') Investment in Imperial Sugar Mills Limited (related party) Investment - available for sale Investment in Imperial Sugar Limited (IMSL) - related party At equity method - Quoted Being significant influence over IMSL Fully paid ordinary shares Fully paid ordinary shares Cost Share of post acquisition profits Carrying amount of investment , , , , , , , , , , ,459 74, , , ,441 Market value per share No. of shares held Ownership interest Rupees Number percentage ,862, % ,862, % Summarised financial information in respect of the Company's related party is set out below: Non-current assets Current assets Non-current liabilities Current liabilities Net assets Revenue Loss for the year/period Company's share in IMSL's loss for the year 3,192,550 3,281,318 1,058,960 1,356,979 4,251,510 4,638, , ,782 2,488,593 2,450,419 3,162,392 3,105,201 1,089,118 1,533, ,318 1,844,102 (449,213) (268,885) (71,964) (43,075) 47

50 Note Rupees ('000) Rupees ('000) 24. TRADE DEBTS - considered good Foreign - secured ,564 Local - unsecured: Considered good 462, ,114 Considered doubtful 2,512 4, , ,184 Provision for doubtful trade debts (2,512) (4,506) These are secured against irrevocable letters of credit. 462, , Provision for doubtful debts Opening balance 4,506 12,502 Provision made during the year 2,512 4,506 7,018 17,008 Less: Provision written off during the year 4,506 12,502 Closing balance 2,512 4, LOANS AND ADVANCES Considered good: Loans to employees 23,742 15,936 Advances to: -Suppliers 29,350 83,669 -Letters of credit fee, margin and expenses 60,294 90,542 -Contractors , , TRADE DEPOSITS AND SHORT TERM PREPAYMENTS Trade deposits 83,856 78,098 Other receivables 18,225 14, OTHER FINANCIAL ASSETS 102,081 92,260 Other financial assets These include shares of listed companies classified as held for trading through profit and loss account No. of Shares / Bonds Quoted - at fair value Oil and Gas Development Company Limited Maple Leaf Cement Factory Limited

51 Note Rupees ('000) Rupees ('000) 28. TAX REFUNDS DUE FROM THE GOVERNMENT Sales tax 307, ,267 Income tax refundable/adjustable 443, , CASH AND BANK BALANCES 750, ,695 Cash in hand Cash at banks -in current accounts 49,546 50,161 -in deposit accounts ,423 7, SALES These carry profit/mark-up ranging from 5.25% to 7.15% (2015: 7.00% to 7.50%) p.a. 56,885 58,271 Local Yarn and Fabric 9,519,235 10,675,316 Raw material sales ,290 Waste 120, ,724 Export 9,639,544 10,980,330 Yarn 266,495 2,730,656 Fabric 1,858,739 2,289,055 2,125,234 5,019,711 11,764,778 16,000,041 Commission (44,928) (42,936) 11,719,850 15,957, Sales are shown net of sales tax amounting to Rs. 284,863 (2015: 235,614) thousand. 50

52 31. COST OF SALES Note Rupees ('000) Rupees ('000) Raw material consumed ,094,906 10,707,469 Stores consumed 482, ,147 Staff salaries, wages and benefits ,273,641 1,304,219 Power and fuel 1,781,005 2,131,733 Repair and maintenance 12,635 18,730 Insurance 60,263 58,619 Rent, rates and taxes 2,477 3,502 Other manufacturing expenses 1,154 2,528 Depreciation , ,335 External processing charges 28,034 43,113 11,589,117 15,806,395 Work in process: Opening 414, ,205 Closing (436,792) (414,652) (22,140) 74,553 Cost of goods manufactured 11,566,977 15,880,948 Finished goods: Opening stock 3,713,376 3,065,223 Closing stock (3,808,156) (3,713,376) (94,780) (648,153) 11,472,197 15,232, Raw material consumed Opening stock 613,612 1,128,312 Purchases including purchase expenses 6,924,291 10,192,769 7,537,903 11,321,081 Closing stock (442,997) (613,612) 7,094,906 10,707, Salaries, wages and other benefits include provision for staffretirement benefits for the year Rs. 93,350 (2015: Rs. 39,604) thousand. 32. DISTRIBUTION COST Staff salaries and benefits 6,743 7,422 Rent, rate and taxes Freight 64,412 75,092 Telecommunication 3,470 4,107 Export forwarding charges 86, ,813 Bank charges 914 1,706 Others - 2, , ,408 51

53 33. ADMINISTRATIVE EXPENSES Staff salaries and benefits , ,928 Printing and stationery 1,279 1,316 Travelling and conveyance 16,806 17,637 Communication 4,304 3,785 Rent, rates and taxes 3,537 1,706 Repair and maintenance 13,771 22,238 Insurance 5,290 1,236 Advertisement Fee and subscription 2,666 4,097 Provision for doubtful debts 2,512 4,506 Provision for slow moving stores, spares and loose tools 1,664 1,942 Entertainment 7,732 6,807 Auditors' remuneration ,835 2,700 Donation ,640 6,968 Legal and professional charges 4,506 5,876 Directors meeting fee Depreciation ,131 14,242 Others 1,656 1, , , Salaries, wages and other benefits include provision for staff retirement benefits for the year Rs. 23,337 (2015: Rs. 9,654) thousand Auditors' remuneration Note Rupees ('000) Rupees ('000) Statutory audit fee 2,500 2,400 Review fee CCG Out of pocket expenses ,835 2, No director or his / her spouse had any interest in the donees' fund. FINANCE COST Bank charges and commission 31,851 49,454 Mark-up on inland bill discounting 7,253 18,637 Mark-up on; - Long term finance 426, ,387 - Short term borrowings 362, ,427 - Liabilities against assets subject to finance lease 6,544 7, ,037 1,082,277 OTHER OPERATING CHARGES Note Rupees ( 000) Rupees ( 000) 835,141 1,150,368 Loss on sale of investment property 119,997 Share of loss from investment in IMSL 71,964 43,075 Exchanged loss- realised 1, ,342 43,075 52

54 Rupees ('000) Rupees ('000) 36. OTHER INCOME Income from financial assets Profit on deposits with banks Exchange gain - realised - 24,860 Amortization of deferred mark-up 239,290 61,369 Gain on remeasurement of investments 5 3 Income from other than financial assets Gain on sale of property, plant and equipment 1, Miscellaneous income 1,382 2, ,654 90, TAXATION Taxation -Current year 37, ,736 -Prior years (101,630) (158,384) (63,768) 5,352 Deferred 57,997 49,554 (5,771) 54,906 - Income tax return has been filedto the income tax authoritiesup to and including tax year 2015 under the provisions of the Income Tax Ordinance, Provision for taxation has been made in accordance with section154 and 113 of the Income Tax Ordinance, 2001 ("The Ordinance"). There is no relation between aggregate tax expense and accounting profit. Accordingly no numerical reconciliation has been presented. 38. EARNINGS PER SHARE Basic Earnings per share: Loss after taxation Rupees ('000) (889,811) (896,757) Weighted average number of ordinary shares Number ('000) 498, ,010 Loss per share - basic and diluted Rupees (1.79) (1.80) Diluted Earnings per share: There is no dilutive effecton the basic earnings per share of the company because the company has no outstanding potentialordinary shares. 53

55 39. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES 40. TRANSACTIONS WITH RELATED PARTIES The Company in the normal course of business carries out transactions with various related parties which comprise of associated undertakings, directors, key management personnel and post employment benefits plan. Remuneration of Chief Executive Officer is disclosed in note 39. Other significant transactions with related parties are as follows: Related parties Note Contribution to provident fund trust Rupees ('000) 14,803 15, PLANT CAPACITY AND ACTUAL PRODUCTION Spinning division: Ring end spinning: Total number of shifts 1,035 1,035 Number of spindles installed 221, ,656 Number of spindles worked 198, ,865 Installed capacity after conversion into 20/S count (Kgs.) 75,526,500 75,526,500 Actual production of yarn after conversion into 20/S count (Kgs) 61,694,389 62,184,599 Open end spinning: Total number of shifts 1,035 1,035 Number of rooters installed 2,880 2,880 Number of rooters worked 2,263 2,263 Installed capacity after conversion into 20/S count (Kgs.) 3,996,199 3,996,199 Actual production of yarn after conversion into 20/S count (Kgs) 2,698,119 2,753,430 Weaving Division: Rupees('000') Rupees('000') Rupees('000') Rupees('000') Rupees('000') Rupees('000') Rupees('000') Rupees('000') Managerial remuneration 8,066 5,455 1,800 1, ,253 24,364 Retirement benefits ,398 2,360 Medical ,725 2,436 Meeting fee No. of Executives CHIEF EXECUTIVE EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTORS EXECUTIVES 9, ,455 1,800 1, ,376 29, Certain Executives including Chief Executive Officer of the company are also provided with free use of Company s cars in accordance with their entitlements No remuneration was paid to Non-Executive Directors except the expenses paid for attending the meetings and disclosed at Note no. 33. Non-Executive Directors includes one independent Director. Total number of shifts 1,035 1,045 Number of weaving machines-installed Number of weaving machines-worked Installed capacity after conversion into 60 picks (Lbs) 33,015,504 33,015,504 Actual production of fabric after conversion into 60 picks (Lbs) 25,898,132 26,463,

56 Reason for shortfall: It is difficult to describe precisely the production capacity in spinning/weaving mills since it fluctuates widely depending on various factors such as count of yarn spun, spindles and twist, and fabric pattern. It also varies according to the pattern of production adopted in a particular year. 42. PROVIDENT FUND The following information is based on the latest un-audited financial statement of the trust: Note Rupees ('000') Rupees ('000') Size of the fund - Total assets 118,314 98,271 Cost of investments made ,081 66,036 Percentage of investments made 56.70% 67.20% Fair value of investments 67,081 66, The break-up of fair value of investments is: Rs. ('000) Percentage Rs. ('000) Percentage Loan to members 19, % 23, % Bank balances 9, % 8, % Government securities 38, % 34, % 67, % 66, % These investments out of provident fund trust have been made in accordance with the provisions of section 227 of the Companies Ordinance, 1984 and the rules formulated for this purpose. 43. NUMBER OF EMPLOYEES The total and average number of employees during the year and as at 30 June 2016/30 June 2015 are as follows: Number of employees as at year end 7,188 7,375 Average number of employees during the year 7,282 7, FINANCIAL INSTRUMENTS The Company has exposure to the following risks from its use of financial instruments: - Credit risk - Liquidity risk - Market risk 2016 This note presents information about the Company s exposure to each of the above risks, the Company s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Company s risk management framework. The Board is responsible for developing and monitoring the Company s risk management policies

57 44.02 Credit risk Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from deposits, trade debts, loans, advances and other receivables and bank balances. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Financial assets as per balance sheet Held for trading Investments Quoted - at fair value Available for sale Investments Quoted - at fair value Unquoted - at cost The Company s credit risk exposures are categorized under the following headings: Counter parties The Company conducts transactions with the following major counter parties. - Trade debtors - Banks and other financial institutions Credit risk related to trade debts 694, ,006 The Company has adopted a policy of only dealing with creditworthy counter parties as a means of mitigating the risk of financial loss from defaults. The Company s exposure is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counter parties. Credit exposure is controlled by counter party limits that are reviewed and approved by the management annually. Trade debts are essentially due from local and foreign customers against sale of yarn, fabric and waste material and the Company does not expect these counter parties to fail to meet their obligations. The majority of sales to the Company s customers are made on specific terms. Customer credit risk is managed subject to established policies, procedures and controls relating to customer credit risk management. Credit limits are established for all customers based on past experience with the customer. Outstanding customer receivables are regularly monitored and any shipments to foreign customers are generally covered by letters of credit. Trade receivables are non-interest bearing and are generally on 60 to 90 days credit terms. Rupees ('000) Rupees ('000) Long term deposits 49,650 49,650 Trade debts 462, ,678 Loans and advances 23,742 15,936 Trade deposits and short term prepayments 102,081 92,260 Bank balances 55,969 57,439 56

58 Impairment losses The aging of trade debts and loans to employees at the reporting date was Rupees ('000') Rupees ('000') 0 to 30 days 388, , to 180 days 90, , to 360 days 4,254 2,674 Over one year 2,512 4, , ,184 Trade debts include debtors with a carrying amount of Rs million (2015: Rs million) which are past due at the reporting date but not impaired as there has not been a significant change in credit quality and the amounts are still considered recoverable. Concentration of credit risk Trade debts consist of a large number of diversified customers, spread across geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable where appropriate. Geographically, there is no concentration of credit risk. Credit risk related to banks and other financial institutions Credit risk on balances with banks is managed by management in accordance with the Company s policy. Excess funds are placed in deposits with reputable banks and financial institutions Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management closely monitors the Company s liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual customer. Management has rescheduled the loan financing with The Bank of Punjab and is also in process of rescheduling with National Bank of Pakistan. Furthermore, support from sponsors in the form of interest free loans to meet liquidity shortfall is also contributory to minimize liquidity risk. The Company manages liquidity risk by maintaining adequate reserves and borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note is a listing of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk. 57

59 Liquidity risk table Financial liabilities in accordance with their contractual maturities are presented below: 30 June 2016 Interest/Mark-up bearing Non interest/mark-up bearing Maturity Maturity Maturity Maturity within after Sub Total within after Sub Total One Year One Year One Year One Year Rupees ('000') Total Financial Liabilities Financial liabilities measured at amortized cost ,292,417 2,292,417 2,292,417 Long term financing 1,422,034 7,223,207 8,645, ,645,241 Director's subordinated loan , , ,000 Liabilities against assets subject to finance lease 34,651 32,371 67, ,022 Short-term borrowings 4,302,009-4,302, ,302,009 Trade and other payables ,858,036-1,858,036 1,858,036 Accrued mark up 1,329,798-1,329, ,329,798 Financial Liabilities 7,088,492 7,255,578 14,344,070 1,858,036 2,412,417 4,270,453 18,614,523 Interest/Mark-up bearing 30 June 2015 Maturity Maturity Maturity Maturity within after Sub Total within after One Year One Year One Year One Year Rupees ('000') Financial liabilities measured at amortized cost ,199,009 2,199,009 2,199,009 Long term financing 995,122 7,758,181 8,753, ,753,303 Director subordinated loan , , ,000 Liabilities against assets subject to finance lease 26,665 37,513 64, ,178 Short-term borrowings 4,315,040-4,315, ,315,040 Trade and other payables ,705,391-1,705,391 1,705,391 Accrued mark up 1,172,999-1,172, ,172,999 6,509,826 7,795,694 14,305,520 1,705,391 2,319,009 4,024,400 18,329,920 Effective markup/interest rates have been disclosed in respective notes to the financial statements. Non interest/mark-up bearing Sub Total Total 58

60 Fixed rate instruments There are no fixed rate instruments. Variable rate instruments Financial assets Rupees ('000') Rupees ('000') Cash in deposit accounts 6,423 7,278 Financial liabilities Long term finance 8,645,241 8,753,303 Short term finance 4,302,009 4,315,040 Liabilities against assets subject to finance lease 67,022 64,178 13,014,272 13,132,521 Sensitivity analysis - interest rate If interest rates had been 1% higher / lower and all other variables were held constant, the Company s profit / (loss) for the year ended 30 June 2016 would have decreased / increased by Rs (2015: Rs ) million. This is mainly attributable to the Company s exposure to interest rates on its variable rate financial instruments Other price risk Other price risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate due to changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not materially exposed to other price risk on financial assets and liabilities Financial instruments by category Financial assets as per balance sheet Loan and receivable The Company finances its operation through equity, borrowings and management of working capital with a view to maintaining an approximate mix between various sources of finance to minimize risk. Taken as a whole, the Company's risk arising from financial instruments is limited as there is no significant exposure to price and cash flow risk in respect of such instruments Rupees ('000) Rupees ('000) Long-term deposits 49,650 49,650 Trade debts 462, ,678 Loans and advances 23,742 15,936 Trade deposits and short term prepayments 102,081 92,260 Bank balances 55,969 57,439 Held for trading Investments Quoted - at fair value Available for sale Investments Quoted - at fair value Unquoted - at cost , ,006 60

61 44.04 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing returns Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. Exposure to currency risk The Company is exposed to currency risk on trade debts which are denominated in currency other than the functional currency of the Company. The Company's exposure to foreign currency risk is as follows: Rupees ('000) US $ ('000) Rupees ('000') US $ ('000) Trade debts ,564 3,634 The following US Dollar exchange rates were applied during the year: Rupees Rupees Average rate Balance sheet date rate Sensitivity analysis - foreign currency At 30 June 2016, if the Rupee had weakened / strengthened by 5% against the US Dollar with all other variables held constant, Profit for the year would have been lower / higher by Rs. Nil (2015: million), as a result of foreign exchange gains / losses on translation of foreign currency trade debts. Profit / (loss) is more sensitive to movement in Rupee / foreign currency exchange rates in 2016 than 2015 because of average increase in foreign currency exchange rate during the year Interest rate risk Interest / mark-up rate risk arises from the possibility that changes in interest / mark-up rates will affect the value of financial instruments. The Company has significant amount of interest based financial assets and financial liabilities which are largely based on variable interest / mark-up rates, therefore the Company has to manage the related finance cost which exposes it to the risk of 01month, 3 months and 6 months KIBOR. Since the impact on interest rate exposure is significant to the Company, management is considering the alternative arrangement to manage interest rate exposure in future. 59

62 Financial liabilities as per balance sheet Rupees ('000) Rupees ('000) Financial liabilities measured at amortized cost 2,292,417 2,199,009 Long term finance 8,645,241 8,753,303 Director' subordinated loan 120, ,000 Liabilities against assets subject to finance lease 67,022 64,178 Short-term borrowings 4,302,009 4,315,040 Trade and other payables 1,858,036 1,705,391 Accrued mark up 1,329,798 1,172,999 18,614,523 18,329, Fair values Fair value is the price that would be received so sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is the presumption that the Company is going concern and there is no intention or requirements to curtail materially the scale of its operation or to undertake a transaction on adverse terms. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values Fair value hierarchy Following are three levels in fair value hierarchy that reflects the significance of the inputs used in measurement of fair values of financial instruments. Level 1: Level 2: Level 3: Quoted prices (unadjusted) in active market for identical assets or liabilities. Inputs other than quoted prices included within level 1that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Inputs for asset or liability that are not based on observable market data (unobservable inputs). The Company has financial assets at fair value of Rs million (2015: 0.36 million) which is valued under level 1 valuation method. The Company does not have any investment in level 2 and 3 category. 61

63 45. CAPITAL MANAGEMENT The Company's objectives, policies and processes for managing capital are as follows: - The Company is not subject to any externally imposed capital requirements The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Consistently with others in the industry, the company monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the balance sheet) less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e., share capital, reserves and unappropriated profit). The Company's strategy is to maintain its debt-to-adjusted capital ratio between 40% to 60%. The debt-to-adjusted capital ratios at 30 June 2016 and 30 June 2015 were as follows: Rupees ('000') Rupees ('000') Total debt 13,134,272 13,252,521 Less: Cash and cash equivalents 55,969 57,439 Net debt 13,078,303 13,195,082 Total equity 7,776,690 8,667,437 Total capital employed 20,854,993 21,862,519 Gearing ratio (%) 62.71% 60.35% 46. NON ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE There were no non-adjusting events after the balance sheet date. 62

64 47. SEGMENT INFORMATION Sales: External Intersegment Cost of Sales Gross (Loss) / Profit Spinning Weaving Total Company Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun Rupees ('000') ,620,518 11,599,685 3,099,332 4,357,420 11,719,850 15,957,105 86, ,833 (86,254) (215,833) - - 8,706,772 11,815,518 3,013,078 4,141,587 11,719,850 15,957,105 8,518,318 11,299,940 2,953,879 3,932,855 11,472,197 15,232, , ,578 59, , , ,310 Distribution Cost Administration Cost Finance cost Loss before unallocated income and expenses Unallocated income and expenses Other operating charges Other Income Loss before tax Taxation Loss after tax for the year Other Comprehensive income: Remeasurement of defined benefit obligation Net fair value loss on available for sale investment Total comprehensive loss for the year Reconciliation of reportable segment assets and liabilities Total assets for reportable segments Unallocated assets: Investment property Long term investments Cash and bank balances Other corporate assets Total assets as per balance sheet Unallocated liabilities: Directors' Subordinated Loan Provision for taxation Other corporate liabilities Total liabilities as per balance sheet Geographical information The Company's revenue from external customers by geographical locations is detailed below: Europe Asia 97, ,245 65, , , , , ,460 37,903 44, , , , , , , , ,841 (65,990) 197,873 (43,763) 63,596 (109,753) 261, , , , , ,141 1,150,368 (567,075) (533,338) (377,819) (355,561) (944,894) (888,899) 193, ,654 47,048 (895,582) (841,851) (5,771) 54,906 (889,811) (896,757) (874) - (62) (76) (890,747) (896,833) Spinning Weaving Total Company Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun Rupees ('000') ,260,806 11,350,812 8,350,147 8,440,147 19,610,953 19,790, , , ,451 56,885 58,271 6,876,866 6,964,605 26,720,129 27,492, , ,000 37, ,736 26,562,267 27,209,165 26,720,129 27,492,901 Spinning Weaving Total Company Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Jun Rupees ('000') ,205,231 1,656,635 1,205,231 1,656,635 8,706,772 11,815,518 1,807,847 2,484,952 10,514,619 14,300,470 8,706,772 11,815,518 3,013,078 4,141,587 11,719,850 15,957,105 63

65 48. CASH GENERATED FROM OPERATIONS CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation Adjustments for: Provision for staff retirement benefits Depreciation Finance cost Share of loss from investment in IMSL Gain on remeasurement of short term investments Provision for slow moving stores, spares and loose tools Provision for doubtful trade debts Amortization of deferred mark up Loss on investment property Gain on disposal of property, plant and equipment Operating cash flows before working capital changes Changes in working capital: (Increase)/Decrease in current assets: Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Trade deposits and short term prepayments Increase/(Decrease) in current liabilities: Trade and other payables Cash generated from operations Rupees ('000') Rupees ('000') (895,582) (841,851) 101,884 35, , , ,141 1,150,368 71,964 43,075 (5) (3) 1,664 1,942 2,512 4,506 (239,290) (61,369) 119,997 - (1,259) (527) 1,759,833 2,012, ,251 1,170,524 38,592 (14,369) 53,695 (58,900) 51, ,913 77,016 (5,978) (9,821) (12,815) 28, , , ,591 1,103,002 2,021, DATE OF AUTHORISATION FOR ISSUE These financial statements have been approved and authorized for issue on 10 October 2016 by the Board of Directors of the Company. 50. GENERAL - Figures have been rounded off to the nearest Rupees in thousand except where stated otherwise. - Corresponding figures have been rearranged/reclassified, wherever necessary, to facilitate comparison. Director 64

66 Pattern of Shareholding As on June 30, 2016 No. of Shareholders Shareholding Number of From To Share Held , , , ,781, ,246, ,849, ,108, ,457, ,086, ,677, ,041, , ,522, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,019, , , , , , ,178 65

67 Pattern of Shareholding As on June 30, 2016 No. of Shareholders From Shareholding Number of Share Held , , , , , , , , , , , , , ,538, , , , , , , , , ,074, ,094, ,156, ,760, ,798, ,979, ,275, ,368, ,603, ,094, ,828, ,124, ,940, ,941, ,452, ,527, ,017, ,251, ,471, ,644, ,376, ,097, ,713, ,803, ,447,506 3, ,009,959 To 66

68 Categorical Pattern of Shareholding As on June 30, 2016 Categories of Shareholders Number of Shareholders Number of Shares held Percentage Individuals 3, ,792, NIT and IDBP (ICP UNIT) 1 89, Financial Institutions 12 1,276, Insurance Companies 7 294, Modarabas & Mutual Funds 1 1,074, Joint Stock Companies 25 84,367, Others 2 113, Total 3, ,009,

69 Pattern of Shareholding Under Code of Corporate Governance As on June 30, 2016 Directors/Chief Executive Officer and their spouse(s) and minor children Total Share Held Percentage 1 Mughis A. Sheikh 2 Fareed Mughis Sheikh 3 Muhammad Tariq 4 Muhammad Atta Ullah Khan 5 Muhammad Ashraf Saif 6 Abdul Hakeem Khan Qasuria 7 Muhammad Ikram Ul Haq Spouse(s) and minor children 8 Mahnaz Fareed Sheikh 9 Fozia Mughis Sheikh 10 Shahmeel Fareed Sheikh 11 Nadine Fareed Sheikh 19,470, ,944, , , , , , , ,251, ,393, ,309, Executives Associated Companies, Undertakings and related parties Public Sectors Companies & Corporations NIT and IDBP (ICP UNIT) Banks, Development Financial Institutions & Non-Banking Financial Institutions Insurance Companies Modarabas & Mutual Funds *Shareholding 5% or more Joint Stock Companies Others General Public Grand Total , ,276, , ,074, ,373, ,367, , ,340, ,009, Shareholders 5% or above Fareed Mughis Sheikh Ismail Fareed Sheikh Landsend Securities (Pvt) Ltd. 206,944, ,625, ,803,

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73 ANNUAL REPORT

74 ANNUAL REPORT 2016